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Comments for Fat Pitch Financials

Special situation stocks and value investing

Last Build Date: Sun, 22 Apr 2018 02:33:03 +0000


Comment on Mebane Faber Shareholder Yield Backtest by George

Sun, 22 Apr 2018 02:33:03 +0000

I believe I used the following formula in Portfolio123: ShowVar(@ShareholderYield, 100*(DivPaid(0,TTM)+DbtTotPYQ-DbtTotQ+( EqPurch(0,TTM)-EqIssued(0,TTM)))/mktcap)

Comment on Mebane Faber Shareholder Yield Backtest by Michael

Sun, 22 Apr 2018 00:16:31 +0000

Hi George, could you define exactly how you calculated shareholder yield in Portfolio123? I'm trying to do the same thing myself and I'm having some trouble with it.

Comment on Altman Z-Score Backtest by Ken Faulkenberry

Mon, 19 Mar 2018 13:35:21 +0000

Very interesting results. Not what I would have expected. Thanks for the information George.

Comment on Five Podcasts for Value Investors by Steph

Mon, 19 Mar 2018 09:57:54 +0000

Thanks for listening Himmeny!

Comment on Five Podcasts for Value Investors by mtapia

Fri, 16 Mar 2018 20:07:44 +0000

Thanks for a lovely read before I start my day!

Comment on PEG Ratio Backtest by henrik helander jansson

Fri, 09 Mar 2018 15:17:49 +0000

Hi George, how solid is this backtest? Ive read about quite a few backtests of PEG that was quite bad. What is your take on this? Im really interested in your answer :) Best regards Henrik

Comment on What minimum market capitalization do you prefer for backtests on Fat Pitch Financials? by Pete Czernipeski

Sun, 11 Feb 2018 01:14:18 +0000

Do you actually make money from investing in fat pitches or just ran backtests?

Comment on Price to Free Cash Flow Ratio Backtest by Matej

Sat, 04 Nov 2017 11:52:08 +0000

Hi George, interesting perfect backtest a like it. I would like to ask you for a favor: as if backtest would apply if only DOW30 companies were applied, low P/FCF (less than 15), these companies hold them for exactly one year, sell them on December 31st of the same year. Yearly reinvesting, Investment period: 2000-2016 years. I have no access to the portfolio123. Thank you very much and have nice day Matej

Comment on How to Avoid Value-Traps with Net-Net Stocks by Drew

Sat, 07 Oct 2017 13:39:16 +0000

In wendl's study of NCAV's he finds what several other studies have found...unprofitable NCAV's generate greater returns than profitable ones. This has been my own experience as well. Otherwise I think you had some good points.

Comment on How to Avoid Value-Traps with Net-Net Stocks by Henry Jackson

Fri, 06 Oct 2017 00:39:15 +0000

Checklists are important when evaluating net-net stocks that can provide above average returns (Mohnish Pabrai and Warren Buffett use them). My use of a checklist is akin to pre-flight checklists used by airline pilots. I use all six criteria listed in the post’s summary section. There is one additional criteria in my checklist that I consider prior to deeper balance sheet analysis and that looking at the company’s debt to equity ratio. I prefer net-net stocks that have a debt to equity ratio no larger than 25 percent. When the debt/equity ratio is greater than 25 percent it starts to erode the margin of safety that is important to me as a net-net investor. For additional information on the importance using a checklist follow this link: Also check out the following regarding debt and debt to equity ratios:

Comment on Return on Invested Capital (ROIC) Backtest by Jabbar

Sat, 05 Aug 2017 16:56:29 +0000

Why not use ROIC as net income divide by (total equity+long term liability) In my own simplified backtest. I found it to be compelling. Hope u can try and back test it as well

Comment on Gross Profits to Assets Ratio Backtest by respond2u

Fri, 07 Jul 2017 02:09:48 +0000

Thanks for posting this! I have a few questions-- 1) Have the quintile thresholds changed in the last 2 years? 2) I tried doing this by hand on the 3 largest banks, JPM, WFC, and BAC, and found it put them in the lowest quintile. First, I'm not sure if I calculated things right, and second, is there a bias by sector (e.g., "don't use for financials or utilities") ? Thanks!

Comment on How to calculate your return on investment by Darij

Thu, 17 Nov 2016 12:36:46 +0000

How is the calculation when I increase and/or decrease the position during the period, e.g. buying 100 stock at t0, then another 50 @ t2, then @t2 sell the half (-75); and between these I receive dividends? I'd also be interested in the "lean" performance, i.e. after selling the 75 stock I should "remove" the dividend payments such that I have the instantaneous performance of the remaining stock. Any thoughts?

Comment on How to Backtest Stock Fundamentals Using Portfolio123 by Ra'uf

Wed, 07 Sep 2016 22:24:09 +0000

I have a question. How does one account for delisted or failing companies in this or any backtest? Thanks.

Comment on Free Cash Flow to Enterprise Value Backtest – $50 Million Minimum Market Cap by richard marshall

Thu, 21 Jul 2016 16:53:18 +0000

do you use nopat (i.e., operating cf x (1- tax) as the cf metric? Also, do you break out capex into maintenance and growth; realize that this is very difficult to do. I think i would agree with you that I would not subtract dividends from cf as a measure of value as it would apprear that the test is to measure the cf generating capacity of the business.

Comment on Return on Investment Backtest by Tim

Fri, 08 Jul 2016 14:16:20 +0000

We have not had much success testing ROI. We however did find another quality ratio that works. It was developed by Professor Novy-Marx who defined a quality company as one that had a high gross income ratio calculated by dividing gross profits by total assets. He defined gross profit as sales minus cost of sales and assets simply total assets as shown in the company’s balance sheet (current assets + fixed assets). You can see the full back test here:

Comment on Free Cash Flow to Enterprise Value Backtest by Tim

Fri, 08 Jul 2016 14:02:28 +0000

Another interesting back test thanks George. I prefer 50 million market cap because I invest my own money and would rather look for ideas where there are less interest by analysts and large investors. What may be a better selection criteria is trading volume. For example $100,000 30 day average which should be more than enough for small investors. We tested TTM FCF to EV and five year average FCF to EV on European companies over the 12 year period 13 June 1999 to 13 June 2011. TTM FCF worked a better than five year average FCF but we found that if you combine TTM FCF with other ratios you get much better returns. TTM FCF combined with 12 month share price momentum gave the best result of +755% You can read more about the back test here:

Comment on Are binary options trading just a big scam? by valuetradeblog

Sat, 21 May 2016 05:45:55 +0000

"either the trader wins and earns as high as 80% returns or he loses the trade and also his initial investment. " sounds like a pretty bad deal, huh?

Comment on Kids Take on Finance 101 for Kids by valuetradeblog

Sat, 21 May 2016 05:42:36 +0000

Hi, thank you for sharing! "Finance is something most people don’t start learning about until high school or even college" sadly true kind regards valuetradeblog

Comment on How to calculate your return on investment by Gerald M.

Wed, 18 May 2016 04:22:05 +0000

Really helpful piece of content you shared here! Calculating an ROI is never easy and I have to say you made it easy to understand and nailed it the right way. Cheers